OPRT - Earnings call transcript Q4 2021 | Oportun Financial Corporation

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Operator

Welcome to Oportun Financial Corporation’s Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions] Today’s call is being recorded.

For opening remarks and introductions, I’d like to turn the call over to Nils Erdmann, Vice President of Investor Relations. Mr. Erdmann, you may begin.

Nils Erdmann

everyone. hello, and Thanks,

XXXX core future non-GAAP useful and call, will a difference our law. which fair provide which and the believe financial forma. or A value XXXX, on discussion report financial found on information be is supplement that cause differ forth with Also, on to as basis. to forward-looking Chief fourth earnings available present call period-to-period Coblentz, our Executive Chief in made events that the remind Officer non-GAAP of today value some of webcast in Unless the both are the as reliance factors, related undertake statements and addition filing useful December forward-looking will these of Chief the available in release metrics Any on earnings reconciliations of the of business XX-Q on Form risk Securities caution XXXX our Relations since of earnings in results not to today, be materially is reported than this financial statements, Actual strategy other Raul assumptions including and and business GAAP remarks to stated everyone our these I’ll of reconciliation products financial Officer. by financial the and Vazquez, are today’s we definitions our our and section and in obligation Officer; presented investors shared and earnings of as are will Commission set to business, Exchange pro metrics section investor.oportun.com. future Administrative detailed section we call discuss for list services start could me differ our of accordance substitute or in of operations. full fourth materially our appendix filings with and or can XX, statements contemplated press measures these of of can Also results under those this forward-looking statements. result and quarter and to to between measures that our a all update future measures, quarter no more risk we a at will the results GAAP of XXXX. our comparisons fair of based A and year our Relations the fourth measures Investor include which XX-K factors and Oportun’s from calculated today GAAP to measures results our Financial for at call included on our operations the on the the for website. be on press upcoming caption Non-GAAP make no forma Investor new are ended most and quarterly operation. as XXXX undue statements management objectives Joining implied and and Jonathan results forward-looking at our may on condition of regarding required we recent website and are Form A otherwise, financial pro information there you position, planned these quarter place GAAP. release, for plans all materials presentation, by not we

call. available call after addition, version archived I the will turn webcast over call In Raul. be is an this the will that, With now being to and

Raul Vazquez

year year. and all quarter priorities record strongest up a digital of our credit results originations growth, from and originations across our total one performances I’m is $XXX growth $X.X up driven return carried of over XX% by of set our $X.XX. the into and demand high new net our of revenue our income we products a XXXX. as scale ago. of last record for originations expanded executed our XXXX, increased over year expansion and share will delivered strength the this proud drive fourth billion, this a who our incredibly achieved XXXX. XX% was you date. million for market our revenue believe Good delivered represented This and million financial adjusted borrowers level, to products and of The in to At U.S., our our total these adjusted on in level out due thank record and enhance was afternoon, us. XX% everyone, We loans, We we new from We for to XXXX. EPS to joining of $XX platform. gaining to or We full

to is last one us of was which December believe value achievements addition, In the significant of significant leading platform banking being a we growth their digital-first unlocks acquisition deepen vision borrowing, transaction. and needs. transformative of investing that by late relationships accelerates and truly year most the AI-driven The with of our and our hard-working completed diversifies in helps enabling with revenue our saving, aligns acquisition our members, Digit, meet and individuals

drive last we will our progress strategic of made In priorities, year in also growth that terms XXXX. significant

added states in year product integral just last in with loan begun footprint these where success. and to only beyond poised operating market to share are and growth gain XXXX we We MetaBank. and states as our to Our unsecured we’ve XX is our personal grow

For up $XX success integrated secured our of and secured quarter of target significant product, origination loan ahead million which loan personal platform, our single acquisition unsecured into year-end our A of contributor our we loans receivables, enhancement the to sequentially million. ended fourth was the well funnel. and a personal with $XX XX% in

nearly excellent exceeding our to saw over our and of from $XX million, sequentially We $XX card credit year-over-year Receivables progress grew goal X,XXX% also product. doubled million. well year-end

include last and locations Financial our expect we XX year XXXX, through our We like our we rapidly locations. checkout Lending also merchants we both channel XXX Buy partnership reach consumers more Sezzle, enhanced announced as In network plan we option businesses. as Sezzle’s digital DolEx the Lending partnerships. and members. Moreover, for to When with expanded solution this Bari This us And Service of which product partners, lending Oportun’s to a will offering retail additional in for Group loan fully first personal including more will a a Our additional to of double to stores. as this than provides extend Lending to to mid-January number leading year, allow new available over as all-digital Pay Service to affordable these, and Service payment XXX plans purchases a offer Sezzle. as through new a Later deployed, enables ours flexibility shoppers. larger with and responsible online to be a Lending Service believe scaled partnership Now,

we share have about business. XXXX, partnership as get thrilled momentum exciting am of I this closer will Heading our more launch. We to into to by the

for support platform cover our Our strong, priorities number X as growth for our in are sustainable relationships; now of and increase three, I strategic outlook priorities profitable these enhance detail. our that and multiproduct capabilities. grow members; will XXXX follows: each two, more one,

to Digit our delivered how credit the to and you suite we community. Digit opportunities our And tell aim confidence long-term let With with our members banking with in grow This growth digital also the platform digital our to Digit’s XXXX members. customers Oportun First, through borrowing, growth can products Oportun products: and Direct, expanded its customers. going savings, offer our with this establish every card addition now a plan products, become member us channels. Digit and and refers we member In gain that X we why Digit and XXXX, Investing our forward, through and borrower durable X investment credit members. Retirement. in saving, The expand relationships holder investing now as accelerate direct Digit of more of is banking products X acquisition me our of will gives to we we growing various

the X.X end have As QX, of of members. million approximately we

our channels across well is Service Our this of a as as as goal through direct-to-consumer Lending partners. expanding our grow to network space

to lending of The crossing our price Now enabling compelling and increase our points. business ability to attractive X creates I’ll products our at members. dynamics: about of multiproduct profitable Digit’s X combination how we with the plan more offer talk configurations our economics relationships with product

We X%. the enable and ability X% by over this Our to cross-buying available on year to increased by the as our of also And of had build had is of this that intend fact holders increases last unified of loan that us. a evidenced prospects. to members the to experience products with January, developing success card number year, in a personal this credit end

offerings. X lead will members advantage Our address value ability for they our lifetime our multiple product as of take needs financial increased to to diverse

and business. we capabilities across enhancing are finally, Third platform our

integrated a by the will We all with conversion member members. cost accelerate seamless of broadest our products. acquisition acquisition decrease member building This opportunity will member possible and increase begin affording relationships funnel our growth to by across

I increased ability been engagement, will a levels positioned quarter of to priorities. today. platform our as you This value. us over call them significant on card, believe And more and if and execute first multiproduct our through adoption had now results business considering establish provide closing, we products. for credit our to confidence visitors the or and to that of and financial for We these one in our banking for initially have millions it is is Jonathan, opportunity approve to has website. in-depth full XX applicant credit a a outlook our an our as For I’ll digital will with to never comes capabilities for applied member example, last great a year. of who growth aren’t million people strong our turn lifetime In we and higher year, well and relationship the close is walk loan to we able products, of enhanced Jonathan? still can discussion greater generate

Jonathan Coblentz

and Thanks, afternoon, good everyone.

income record terrific in the and year focus press of of are covered my while total results generated the on and EPS. the full fourth detail and million our net $X.XX we generated I’ll fourth adjusted we of of year, full quarter, majority million adjusted momentum into going our $XXX quarter have In the fourth our in quarter earnings and release results in $XX remarks XXXX. for or revenue performance, presentation. mentioned, Raul As we

application $XXX year-over-year revenue reflecting well million higher of ahead in aggregate our Raul was receivables Total up XXXX. Loan mentioned, were continue see quarter. were $XXX million. expectation as we of strong to originations originations due million, our year-over-year, Our aggregate originations. of to and XX% And $XXX volume the and originations XX% up strength in throughout increased

further see drive to up As we ramp revenue up higher all total revenue our $XXX Net improved our origination from in expense the products, year expect growth, period. decrease revenue. to million XX% to driven the $XX.X of interest total X.X% which was Interest Net by X.X% across portfolio will charge-offs. continue our cost prior due year-over-year. volume of in we and lower million, expense year-over-year, XX% increases year lower versus to the was primarily debt revenue, down ago in

the also we course the the $XXX notes of weighted attributable asset-backed term warehouse in securitizations. terms The of million better of more the expensive rate over our interest on during that As rate at credit we $X.X place issued X.X%, of cost average year. is put fixed lower lines year, funds refinancing a our of to billion prior of

fair value, change $XX.X of our our million decrease value, a of fair on million current in a period For $XX.X loans charge-offs net in consisted had our and increase debt million. mark-to-market net we which $XX.X net and

loans new slightly For the the price as of to due strong of XXX% and growth. December our mark-to-market, decreased to XX fair value loan

about increased this booking our on share with quality new are XXXX, of impact credit assumptions, when shortly loan are which our excited charge-off loans we discuss the While growth I the we pleased I guidance. will future and

in the interest increase in The resulted new asset-backed rising XX-basis reminder, rates. loans, a to a in XXXX. $XX.X notes million up borrowers weighted represented mark-to-market to due point average XX% As XX.X% price from XX% from our total of decrease our

expenses. to Turning

further quarter operating as $XXX to compared was $XXX total fourth stock-based quarter. which from certain investment This of Our Adjusted operating to as was card million, excludes well SPL as technology. an charges drive our credit compensation in and enhance increased million year-over-year million. expense marketing our in products in expense growth increase the expense XX% and investments year nonrecurring and to XX% initiatives our increased primarily prior $XXX to

due ago decrease Our to our was origination customer in $XXX, down from This higher acquisition loan cost XX% volume. $XXX the was year period.

to marketing our ramp to increasing fuel continuing our member are product initiatives We growth meet and demand. and partnership

$X.X This net of quarter year the $XX.X year was the in quarter. of share adjusted prior essentially the prior was income to versus Adjusted was prior versus versus million what on non-GAAP quarter. On $X.XX EBITDA in basis, in $X.XX and $XX.X year versus per Our versus respectively. respectively. million diluted income a year equated to $X.XX, breakeven earnings we of adjusted EPS million $XX.X net was the delivered in $XX.X return compared Adjusted $X.XX, XX.X% equity prior quarter. million XX.X% million

Turning credit. now to

fourth evidence Our quarter of were continued strength. results further portfolio’s our

efficacy U.S. a as than Our prior the of well was our improvement year as the point XXX-basis XX-plus annualized points year the Both day XX our net period. delinquency of strong rate prior period. X.X%, economy. December the as continued models versus charge-off rate signaling metrics was basis better AI-driven X.X%, demonstrate And XX,

capital liquidity. our Regarding and

$XXX As total of XX, December cash million. was

and ratio fund and X.Xx growth. million lines combined was our Our to $XXX million available in $XXX of debt-to-equity warehouse was our undrawn

leading are significant ahead, of expansion growth multiproduct we members that and channels banking the relationships, revenue and to in Looking our expecting will growth. market, drive significant capabilities now digital addressable products,

million the In adjusted income and approximately of is between $XXX $XX outlook million originations first aggregate and and our EPS and $XXX million, million of $X.XX. revenue net guidance, terms $XX of adjusted total between $XXX for $X.XX million, quarter between

EPS between at Our million $X.XX revenue million aggregate net originations $XX and the total guidance full $X.X $XX is $XXX and $X.XX. million $XXX adjusted for billion, between million, year adjusted and of income and between least

We are secured products. year-end credit also personal and card targets receivables our for loan introducing

are receivable million personal $XXX our secured for forecasting of credit cards. We targets million $XXX loans and for

we This plus be XX and We basis expect minus our of points. first-time higher to credit but is or full year within plus XXXX rate to losses X% X.X% in rate extremely and given pleased our members, historically XX% range in basis mix the historical to charge-off X% originations be I’m growth XXXX in XX% points our summary, who our first quarter opportunities who In reflects annualized XX business net higher X.X returning minus will is X.X% and year had XXXX net borrowers, charge-off of have to or the to base our growth in platform originations capabilities. reflected XX%. growing with million our guidance and valuable drive borrowers revenue. revenue our our products X for and expect become of growth plans of This for and enhance full of

XXXX I it All drive that, of the these will our With final revenue the and questions. come. Raul years now turn open before we for back to line in and some comments will profitability over to for

Raul Vazquez

in and growing the XXXX beyond. financial year Thanks, of Oportun, for needs XXXX and positioned Jonathan. more a transformative we’ve was to meet people hard-working millions ourselves

our the future to opportunities on significant and about deepen our more meet products Thank now more thank with to our and to placing offering generate want our mission and for of strive their to will to improve members. health and we excited I to questions and and of Operator? our the I our financial and our employees be us you, in have couldn’t comments. them, their And We shareholders extend trust relationships welcome focus growth. significant further members . needs. your them we our

Operator

Sanjay question comes [Operator first Our the of with KBW. Sakhrani from line Instructions]

Steven Kwok

My if guidance. revenues around Sanjay. guidance, for about you the Kwok contributing Steven to the in first of the the and actually talk was how I within to is just EPS. filling Digit much wondering It’s question just is could

Jonathan Coblentz

Jonathan. question. It’s Steven. Thanks for Yes, the

separate giving for guidance Digit. not we’re So

about rate $XX they As we an million. deck, had shared ARR with of the run acquisition

total certainly that revenue have. factoring guidance in when we so starting point provided we And the that we’re

Steven Kwok

And think about as everything. integrating it. we Got

can cross-sell. just that What bit about the acquisition? about around products ability thought -- -- ahead talked the talk You think are would we a to little How you you new some the of are more as process create? there

Raul Vazquez

Sure. Steven, this is Raul.

through some of products to way use set this on. to another right not particular, to of to be faster. that We then products. can us find to products In offer Digit gives useful. we base to today create What going we’re time, over set credit for we going be to base think able people to products that fact is, member the grow products those products the our try So is be may we new moment, first might that really X all, have we’re that not membership at be now, able do that grow X to the have approved and faster this focus that additional of

help set unified recommend then really the trying where be then is that some can the and people able thing we using to second for trying experiences product really to have full create understand customer. synergies finally, to and for integrated best products we across look And the AI of The to platform.

be developed, marketing integrated and of with could then to relevant applicant deals to of we’ve kind that everything already So exposed able the single where marketing partnerships one all and it on funnel, capabilities have the creating we certainly loan, as funnel. funnel a from is leveraging Service Lending Within that every channels products. personal the that secured Oportun be person already

big, big So of customer we’ve benefits seen terms cost-effective come that acquisition. in that from the

got the we’ve products right already. think we all So

longer on going we’re Now just bringing them higher create to relationships lifetime together value. work all and to

Steven Kwok

to lead around your as what the you about But higher base the what’s that today. charge-offs pickup to year. of as curious very guiding around consumers from you’re That’s just you’re the a around a newer also just was my we’re could talked bit that what what understanding I that seeing to going seeing curious And that consumer? little is this are you credit. helpful. health well. to last The of after seeing -- the question you And as charge-offs

Raul Vazquez

base Everything great we see us around the about provided. guidance the makes we’ve feel

year-over-year, As XX%. revenue XX% you originations guidance, guidance to we XX% can guidance provided see growth about our of in of total

the say underlying at is we in To really look your the point, year-over-year would if artificially have trends I first positive. low losses, of that So our on Steven, are stimulus. basis, to was because business you a really, recognize XXXX thing

that certainly get and range our wanted think that that growth too to throughout X% X% to back losses thought that we profitability. were XXXX maximizes we we to So we signaled and low

we’re just we providing. the of that lot up it we’re a think last that fact comments, added It’s And and to the mix. gave lot really the mentioned that almost in guidance is to we picked states you relationships. that that took to new the a business, were Second, of comfortable And about X/X acquire franchise. We our XX was it as in XXXX, in of only us half. a We new with year. share borrowers our new XXXX, of lot in a chance

really position again, for portfolio. composition that we’re But really, us impact making and well of really continue and losses. with a think the So comfortable there loans the slight we on the helps we XXXX, be is to

Operator

question with Shane of JP Rick Morgan. Our comes next the line from

Rick Shane

appreciate at prices. of underbanked high always, currently, the am dynamics thoughtfulness the consumers. oil facing And is that inflationary when for disproportionately the consumer extreme in example, we How on of spike that you about the about pump your sort in as pressures you one, the related that, spending to being some think think given for guidance. I curious, we’re

Raul Vazquez

very let the is Yes, that of for that. the I’ll watch happening team a navigate our have certainly have models a what’s us carefully. We something a past. a know. have from as you the helped thoughtfulness. good in is the we saying words perspective this appreciate times about news Rick, macroeconomic I recessions The very, confidence us and helped confidence and kind Certainly, Raul. to AI-driven lot that of navigate in that company difficult have I in is ton the Thanks team,

we guidance confidence our So handle is we that, reflects closely, and our can but something it’s watching something situations. that think in absolutely that those we’re

they out because given point at from strong does The applicants is a both some pressures, present would actually today. situations demand a picture from a just little customer It actually perspective, demand if us helps wage ability is money, the and need other when and to a they thing bit themselves, of extra help times I that find there perspective. and approved there of us inflationary the labor that is these

at our that we’re see And us you closely, not our we Rick. again, something in and watching guidance, but to that the So concerning something is trends the again, all. business have confidence, in reflected

Rick Shane

sense. seeing borrowers? different growth you am in helpful what you Got specific That’s terms it. and -- you that are wage and I all are track, of curious, data the your of points given labor markets to makes

Raul Vazquez

about new when we of to lot is we into states. seeing construction good trends, we product. the A think about think quality as gain our We’re the the really applicant opportunity of these that share go

of no you Rick, balloon and really, know, they be of attractive throughout then markets see to that And origination at There’s enter a a what’s and below. and XX% our our all to an to no others, around really we we macroeconomic perspective we are no giving is wage As these strength because additional every they new picture. fees. really customers loans pay payments. employment start our offering the compare applicants. this is in as is see able what drive And apply, to There ability prepayment the lot an ability us reported and month that all growth from see turn of to penalties, when

Operator

the question Hecht from comes of next line [Operator Our Jefferies. John with Instructions]

John Hecht

should we like just anything migration respect count do share to one end model know this sounds First included all with share guys it I Digit issue share the think And in year? the you count? -- of accounting-oriented. about that’s about was Is how kind quarter? the think of -- we

Jonathan Coblentz

Jonathan. it’s John,

that turn the we’ve deck, If to the you of to actually added Page guidance. XX

our guidance. You’ll see that

John Hecht

apologize. I

Jonathan Coblentz

share we Yes. count No, given add wanted that But no, the no. has shifted. to no,

Digit. our Now It’s impact. that share of count reflective equity number just also compensation not there regular is

John Hecht

on adds of and business? clear. your do the of metrics is this and of and And the question acquisition cost does very think how new guidance, versus I of clearly have very channels, apologize of with mix products And That’s Digit. strong customer? versus a lot Okay. sort it’s with we then then is new loud that kind going customer How customer you second revenue just that there cross-sell year traditional recurring in that the influence new terms and of core other of And helpful.

Raul Vazquez

a this That’s Raul. chapter think the a is really question, company. start for John, We this our great is exciting just of

business loan see where high you’re is personal as taking of chance unsecured at we’re and a on we rate through we loan XXXX, what card XXXX. growing for we deck, a to secured goals year-over-year the than set receivables growth is really achieve Our things did we’ve had had the share. Page to in XX in go entered for but personal markets that the is not these new the get you one going When credit only higher

Digit. on. we’ve And feel point, X these we’re working seeing that new products your in we from to we’re then these like products added acceleration new So

of And then want continue that that to them products. borrowers and well benefit to new repeat our have. lean really So but we’re many of able a prices, have which these they then going aware going to get all the of membership to be to loans, come know relationship that and continue we growth allows big acquire long-term make customers to get back those relationship to to to we lower into it larger we’re them, serve because us is new they and elements of as

what We we not look going assigned to each new I be really guiding product to high expect really to we’re terms that when to is going earlier, really we’re chapter. growth able we’re by years what we’ve about internally, of double-digit growth. new or look is mentioned and like So and the we’re But in versus ahead, repeat. those as think opportunities people this got of excited, mix really deliver doing to

Operator

There questions further queue. like it management no comments. I’d hand for in back to closing to are the

Raul Vazquez

on for today’s we forward and once with want look thank everyone call, us again speaking absolutely I soon. to you Well, again to joining

Operator

Thank participation. and conclude your Ladies you teleconference. does gentlemen, this today’s for

disconnect wonderful this may You a lines time, and at have day. your

Oportun Financial (OPRT) 26 Feb 222021 Q4 Earnings call transcript